How DoD Policy Affects Private Expenditure on Independent Research and Development

A Comparison of Empirical Studies

by Frank Camm


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This Note uses economic models and concepts to analyze the incentive effects of the Defense Department's (DoD's) policy on independent research and development (IR&D). IR&D is research and development conducted by contractors out of their own resources, a portion of which is later reimbursed by DoD. The Note compares the empirical results of three studies that consider the ways in which DoD policy affects the level of private spending on IR&D. In particular, it compares the varying methods, assumptions, and datasets used in these studies to determine how consistent their results are and, when taken together, what they can tell policymakers about the likely effects of changes in IR&D policy. The findings indicate that currently available empirical studies do not allow policymakers to predict how policy changes would affect private investment in IR&D.

This report is part of the RAND Corporation Note series. The note was a product of the RAND Corporation from 1979 to 1993 that reported other outputs of sponsored research for general distribution.

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